NY Life Insurers Ordered To Give Families Lump-Sum Payouts

By Erin Fuchs

Law360, New York (February 24, 2012, 5:28 PM ET) -- New York's insurance watchdog on Friday ordered insurers to pay beneficiaries right away when policyholders die, instead of keeping the money in retained asset accounts, a practice that had allowed insurers to earn interest at the expense of survivors, the state said.

New York Department of Financial Services Superintendent Benjamin M. Lawsky was the first to enforce “this tough, pro-consumer policy” that would make full, lump-sum payments to survivors the new standard unless they specifically choose a retained asset account.